A lack of proper risk management and controls can have widespread impact on an organization.  One example is financial institutions need to verify the identity, sustainability, and risks involved with maintaining a business relationship through the Know Your Customer guidelines. These procedures fit within the broader scope of a bank’s regulatory policies including Anti-Money Laundering (AML) and are employed by companies of all sizes to ensure that their proposed customers, agents, consultants, or distributors are anti-bribery compliant – and are who they claim to be.  Capturing the true scope of a legal entity is also key to other regulatory and compliance mandates, such as Single Counterparty Credit Limit.

A lack of an adequate and cohesive view of entities across systems makes it increasingly difficult to measure the full scope of a relationship and verify that those business relationships are compliant. It is evident and necessary for institutions to both prove and ensure their compliance with these regulations in order to avoid federal fines like those imposed on Citigroup Inc. 

Beyond the risk management view, there are also lost revenue opportunities by not having a cohesive view of entities across the bank.  A financial institution that is unable to connect the dots between the business owner that has made a commercial loan with the bank and the opportunity that may exist by extending wealth management services to that same business owner is leaving revenue on the table.  But, in many banks where customer relationships are managed within customer relationship management (CRM) platforms (e.g., Salesforce) that are siloed by business unit, those connections and opportunities don’t often materialize, or at least not most efficiently.